My scenario:
I got my first droid around january of this year. Then I rooted it and flashed one of the first versions of bugless beast into the droid, after I updated my droid to 2.1. The rom was so clean and efficient, that I never had to come back to the forum to upgrade roms because I was very satisfied with how my phone was performing. Especially the wifi tether and the overclocking.

Now, last Friday Idropped my phone into a bucket of hot coolant while I was working. Hot coolant + droid = dead droid =(. Thank god for insurance, because I got a replacement droid shipped to my door the next day. Butttt this current droid is running 2.2, and the first thing I tried to do was root with the same files and process I used last time, but for some reason, when I try to apply the update.zip via spr, I get a "signature verification failed" message, and can't get passed it.

I tried searching the whole weekend and I guess this whole 2.2 thing is new so its a pita to find a legit thread on how to root/flash new rom.

I'm not a hardcore noob on this and I'm sure I can do it because I did it before, maybe my files I'm using won't work with 2.2? So now my gameplan is to use bugless v0.4, rooted of course. How to I go upon it? I hear of these new programs like easy root and clockwork, but they seem to be "automated rooting" programs. I feel more comfprtable doing the whole process myself, step by step.

So these are the files I would need, correct?
I need to install "RSD lite" onto my pc a recovery that will flash "sprecovery" into the phone, and I use that to install a "console" which allows me to type commands to root the phone. Once rooted, I download "bugless v.04/update.zip" and use sprecovery to install that. Then I have to download an "overclocking/wifi kernel" and install that via update.zip/sprecovery.

Then I should have a rooted droid with bugless v.04 that is overclocked with a wifi tether. Correct?

You sorta have it right. Basically what you will be doing going that route is using RSDLite to install a custom recovery (SPRecovery) over the stock recovery. This custom recovery allows you to install things that aren't signed properly (like that error verifying signature you ran into). You won't need to use a console for any part of what you want to do. Once rooted, you can use it as a tool to do things if you wanted to, but it won't be necessary.

Once you have the recovery, all you need to do is download BB .4 and install it through SPRecovery. All custom ROMs should come with root installed already. Also, the stock kernel for 2.2 is clocked up to 800mhz. I have never touched BB.4 myself to see what it comes with, but I would assume 800mhz - 1ghz would be his base kernel. If you wanted to go faster than whatever his ROM comes with then you will need to flash a compatible kernel.

So in a quick breakdown of what you will do:
1. Install RSDLite on your PC.
2. Flash the SPRecovery.sbf onto your phone.
3. Reboot your phone into recovery, and make a backup (hold X while booting up to get into recovery). *note your phone isn't rooted at this point you just have a custom recovery.
4. Rename the BB.4 file to update.zip and put on your sdcard. You can actually do this in SPRecovery by mounting your sdcard from in there (partitions menu I believe). Or you can do this before this entire process begins. Verify it is update.zip , and not update.zip.zip (this happens a lot to people haha).
5. Wipe data and cache
6. Install update.zip
7. Reboot into phone. *Note now your phone should be rooted
8. Install your wifi tether app
Optional 9. Install a different kernel and/or theme

That is just a rough guide of the process to install BB .4 from where you are at now.

Basic How-To
1. Install RSDLite on your PC. File can be found on forum.
2. Flash the SPRecovery.sbf onto your phone.
-Download the file (can also be found on forum).
-Open RSDLite.
-Turn off your Motorola Droid.
-Connect your droid to your computer via USB.
-Boot up your droid in recovery mode. Do this by holding the down button on the D-Pad while pressing the power button to turn on the phone.
-Your phone should be seen under RSDLite.
-Select the SBRecovery.sbf file using the "..." button next to the filename box.
-Click start. You should see activity on your droid as the progress percentage proceeds in RSDLite.
-When finished, power down phone then unplug.
3. Reboot your phone into recovery.
-Hold X while pressing the power button to get into recovery.
-You should come accross to a menu.
-Go into "Mount options".
-Go into "Enable USB MASS STORAGE".
-Connect phone to pc via USB cord.
4. Download the rom of your choice, which here, is Bugless v.04. Available here.
-Rename the file to "UPDATE.zip". Make sure it is not "UPDATE.zip.zip", it happens alot and will cause epic fail haha
-Your pc should've detected a new drive when you just connected your phone to your pc via step 3. So copy the UPDATE.zip file to the upper most level of the drive, which is your SD card on the phone.
-Exit out of the mount options menu
5. Select "Wipe data/factory reset" and then after that is finished, select "wipe cache partition" and allow to finish.
6. Select "Install".
-Select "Allow update.zip installation"
-Select "Install /sdcard/update.zip (deprecated)"
-Allow it to do it's thing and finish.
-Exit out of the "Install" menu and reboot phone now.
7.Now your phone should be rooted with bugless beast! (or whatever rom you chose)
****And as cupcake says, these two are now optional.
8. Install your wifi tether app
9. Install a different kernel and/or theme